Case Study: Analytics and Automation

How Hilco Performance Solutions’ Financial Modeling and Pre-Deal Diligence Helped Drive a Successful Transaction for a Truck Leasing and Sales Business

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BACKGROUND

19th Capital Group was a provider of asset financing and fleet management solutions for operators of Class 8 fleets across North America. The company operated as a wholly owned subsidiary of Element Fleet Management, a global fleet management company. 19th Capital’s success was dependent on maintaining a high percentage of its portfolio on active leases.

PROBLEM STATEMENT

In 2019, an over-supply of Class 8 trucks flooded the market resulting in a significant downturn in the freight industry. 19th Capital’s active lease percentage dropped drastically, and profitability plummeted. The issue was magnified by the fact that the company had been bought and sold many times in recent years. Its legacy owners included Celedon and Quality Companies. These rapid management changes left 19th Capital without strategic direction and efficient processes.

After exhausting a sale process that drove in no qualified bids, the company notified employees that it would begin to shut down in late March of 2020, laying off the remaining 200+ employees. A Hilco Global representative was made aware of the pending business closure which prompted an evaluation to purchase the assets.

SOLUTION & IMPACT

Hilco Performance Solutions (HPS) created the financial models and conducted the deal negotiations that resulted in the purchase of the assets of 19th Capital Group. The team developed detailed P&L forecast models including assumptions around idle truck sales revenue, lease collections revenue, and all costs associated with operating the company. HPS then supported multiple model iterations as lender negotiations were conducted and capital financing was secured with the private equity sponsor partner.

Hilco purchased the assets of 19th Capital Group from Element Fleet Management which included ~1,700 idle trucks and ~2,050 trucks on active leases at the time of purchase. The HPS financial model was the basis for negotiation of the asset purchase agreement. Once an agreement was reached with 19th Capital, the HPS team led the accelerated 2-week due diligence process through to deal close.

The successful acquisition of the assets of 19th Capital demonstrates the capability of Hilco Performance Solutions to lead pre-deal modeling, negotiations, and final diligence for clients.

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